The founders of Google, Twitter and eBay have signed a strongly worded letter criticising controversial US legislation ahead of a debate in Congress.
The Stop Online Piracy Act (Sopa) aims to slash the amount of pirated content on the internet.
But signatories including Google co-founder Sergey Brin claim it amounts to China-style censorship.
The bill has the backing of Hollywood and the music industry.
Sopa was introduced by Judiciary Committee chairman Lamar Smith, a Texas Republican, who said the legislation was designed to "stop the flow of revenue to rogue websites... that profit from selling pirated goods without any legal consequences".
It would give content owners and the US government the power to request court orders to shut down websites associated with piracy.
Sopa aims to stop online ad networks and payment processors from doing business with foreign websites accused of enabling or facilitating copyright infringement.
It could stop search engines from linking to the allegedly infringing sites. Domain name registrars could be forced to take down the websites, and internet service providers could be forced to block access to the sites accused of infringing.
A similar law, the Protect IP Act, is making its way through the US Senate.
Critics argue that the proposals are too broad and could lead to the closure of a range of sites.
The latest letter, published in several US newspapers including the Wall Street Journal, The Washington Post and the New York Times, reads: "We've all had the good fortune to found internet companies and non-profits in a regulatory climate that promotes entrepreneurship, innovation, the creation of content and free expression online.
"However we're worried that the Protect IP Act and the Stop Online Piracy Act - which started out as well-meaning efforts to control piracy online - will undermine that framework."
The letter said that the legislation would require web services to monitor what users link to or upload.
The bill would also "deny website owners the right to due process" and "give the US government the power to censor the web using techniques similar to those used by China, Malaysia and Iran", the letter goes on.
"We urge Congress to think hard before changing the regulation that underpins the internet... Let's not deny the next generation of entrepreneurs and founders the same opportunities that we all had."
The letter was signed by Twitter co-founders Jack Dorsey, Biz Stone and Evan Williams; Flickr co-founder Caterina Fake; Yahoo! co-founders David Filo and Jerry Yang; LinkedIn co-founder Reid Hoffman; YouTube co-founder Chad Hurley; PayPal co-founder Elon Musk; Craigslist founder Craig Newmark; eBay founder Pierre Omidyar and Wikipedia founder Jimmy Wales.
Another appeal, signed by 83 key internet engineersincluding father of the internet Vint Cerf, has also been sent to Congress.
"We cannot have a free and open internet unless its naming and routing systems sit above the political concerns and objectives of any one government or industry," it reads.
"Censorship of internet infrastructure will inevitably cause network errors and security problems. This is true in China, Iran and other countries that censor the network today; it will be just as true of American censorship."
A group of US politicians is proposing an alternative to Sopa that would see funding cut off to foreign websites accused of copyright infringements in a similar way to how the US ended Wikileaks' commercial operation.
They argue that the International Trade Commission (ITC) should take charge of combating piracy, instead of judges. The ITC would be tasked with reviewing claims of online infringement against foreign website owners, ordering them cut off from funding if the claims prove true.
While the US moves to tighten its copyright laws, the UK is aiming to relax its own.
The Intellectual Property Office has launched a consultation exercise intended, among other things, to allow the ripping of CDs to digital music players.
It follows recommendations from Professor Ian Hargreaves inhis review of intellectual property.
Other plans include allowing data mining of scientific research for non-commercial use and a licensing scheme to make it easier for digital services to gain access to copyrighted works. It also proposes relaxing copyright rules around "parody" videos which are increasingly popular on YouTube.
The move was welcomed by the British Library and watchdog Consumer Focus, but The Publishers' Association said it was concerned that the relaxation could make intellectual property theft easier.